How Moscow's Preoccupation With Sochi Tourism May Hurt Stability in the North Caucasus

By Ronan Keenan

Visitors brave heavy snowfalls as they attend a bobsleigh test event at the "Sanki" sliding center in Rosa Khutor, a venue for the Sochi 2014 Winter Olympics near Sochi on February 17, 2013. (Kai Pfaffenbach/Reuters)

Last year in London a curious gala dinner was hosted by Northern Caucasus Resorts, a Russian government-backed group. Building upon Russian city Sochi's
hosting of the 2014 Winter Olympics, the night's event was aimed at attracting international investors to lavish tourism projects in the surrounding North
Caucasus region. But before the keynote presentation, a lengthy show took place, with various performers dancing Lezginka, a traditional Caucasus routine
in which men wear a sword at their side and, stepping quickly, imitate eagles in an effort to woo the aloof female participants.

The performers were later joined on stage by Islam Nazaraliev, Deputy Director General of Northern Caucasus Resorts, who momentarily partook in the dance,
extending his arms stiffly like wings. Nazaraliev then began his attempt to convince the audience to have faith in Russia's $30 billion (980 billion
roubles) plan to construct luxury ski resorts throughout the restive region.

Yet it seems to be a case of life imitating art as, just like the seemingly indifferent female dancers, outsiders have been unimpressed with Russia's bold
attempts to demonstrate its ability to transform an impoverished area defined by militancy into a hotbed of tourism. Launched in 2010, progress on the
tourism effort has been stilted. Incongruously, the one factor expected to boost Northern Caucasus Resorts, the Sochi Olympics, has spurred power struggles
that are hampering both the tourism project and broader political stability in the region.

Northern Caucasus Resorts claims its new developments, once constructed, will accommodate 10 million tourists a year. The Russian state has initially
contributed 60 billion roubles ($2 billion) to the North Caucasus developments, with outside financiers expected to make up the remainder. The state also
provides guarantees to investors for "non-commercial risks" covering up to 70 percent of borrowed capital. Early on it attracted a commitment from the
French firm Caisse des Dépôts et Consignations of up to $13 billion, although its spokesman, Laurent Vigier, recently admitted that the project "is not an
easy idea".

Nazaraliev's London presentation, which mirrored a Northern Caucasus Resorts seminar held at Davos this year, emphasized the natural beauty of the area,
with pictures displaying lush green forests and snowy mountain tops that he labeled "the highest and most unexplored peaks in Europe." While true,
Nazaraliev could have saved time if he repeated Chechnya's deputy tourism minister, who once said the region is "like Switzerland, only without the roads".

The large-scale investment in the North Caucasus is a well-intended approach by the Russian government to boost social stability. Creating thousands of
jobs in a region where the majority of militants are aged between 18 and 22 will hypothetically lead disenchanted youth away from radicalization. In 2011,
then-President Dmitri Medvedev described Northern Caucasus Resorts as an endeavor to "show how we can beat poverty and terrorism with tourism." The project
aims to piggy-back on the anticipated spectacle of the Sochi Olympics, which aims to accentuate all that is attractive in Russia's southwest corner, while
concealing anything undesirable. But to ensure everything in the region looks nicely polished, the Kremlin has taken considerable action.

In January 2010, Medvedev created the North Caucasus Federal District, effectively carving out the 9.5 million population of the North Caucasus from the
Southern Federal District, in which Sochi remains. The move was viewed by some as an attempt to superficially ease security concerns by creating an
imaginary barrier between prosperous areas such as Sochi and restive North Caucasus republics like Chechnya and Dagestan. Sochi is about 200 miles from
Chechnya and a further 50 miles from Dagestan. Russian author and The Moscow Times contributor Yulia Latynina summarized the futility of the
gesture. "What is the deeply ill system doing [now]? The answer is very simple: it is simulating administration," she wrote.

The move conveniently isolates the North Caucasus' militancy statistics from the rest of the Southern region. Violence in the North Caucasus remains
unsettlingly high. The Caucasian Knot, an independent monitor of events in the region, reports that 96 terrorist attacks were carried out in the North
Caucasus Federal District in 2012, with 700 people killed in violent clashes. 124 people were killed in similar incidents during the first quarter of 2013.

The Northern Caucasus Resorts project was established later in 2010 with a mandate to develop in six sites throughout the North Caucasus and Southern
Federal Districts. Ties to the Sochi Olympics were evidenced by Akhmed Bilalov's appointment to positions as Chairman of Northern Caucasus Resorts and
Deputy Head of the Russian Olympic Committee. But blending the two roles perhaps wasn't the best idea -- President Vladimir Putin admonished Bilalov on
Russian television before firing him from his positions in February due to delays and overspending on Olympic facilities.

The public nature of the Bilalov affair appeared to be an attempt by Putin to demonstrate his authority over the Sochi Olympics while portraying himself as
a leader unsympathetic to ineptitude. The dismissal had the added consequence of throwing the corporate structure of Northern Caucasus Resorts into
turmoil, further damaging its appeal to outside investors. That may be Putin's intention. The tourism project is viewed as Medvedev's creation, and its
downfall would be a vehicle for Putin to reassert his political dominance over the former president.

Nonetheless, the establishment of an entity such as North Caucasus Resorts with an independent leadership indigenous to the region is not an approach to
stability that Putin was comfortable with.

"Moscow was getting worried about the influence Bilalov was acquiring," Valeriy Dzutsev, a journalist from the North Caucasus city of Vladikavkaz told me.
"The rationale for building the resorts was to make North Caucasians work for a Russian company and so keep them under full control. But if the North
Caucasians themselves owned the company, then it wouldn't make any sense to Moscow. So he had to be dismissed or even rooted out as he had substantial
influence and capital." Maxim Bystrov, who has previously held positions in Moscow, was subsequently appointed as the new figurehead at Northern Caucasus
Resorts.

The Bilalov firing can be interpreted as one stage of the Kremlin's intent to rein in North Caucasian autonomy; something it is eager to achieve in the
prelude to the Sochi Olympics. This process has also resulted in changes at political level, particularly in Dagestan, the most troublesome of the North
Caucasus republics. In January, Magomedsalam Magomedov was discharged as Dagestan's president. Magomedov, an ethnic Dagestani Dargan, was an appointee of
Medvedev in 2010 and was an advocate of dialogue with radical Islamist groups. Magomedov was replaced with Ramazan Abdulatipov, a hard-line politician with
closer links to Moscow than to the various ethnic peoples of his region.

Seemingly "soft" initiatives advanced by Magomedov, such as a rehabilitation facility for Islamist militants, were shut down and the Russian government
forces intensified their counter-insurgency operations. One
operation in April saw the forced relocation of Gimry village's 5,000 population, including hospitalized patients, to a temporary shantytown as police
forces hunted a group of militants. Mass damage was reported in the village and three suspects were killed. Such activities give the impression of progress
against Islamic militants but leave the broader population resentful of authority.

"The village was full of power agents in masks and camouflage who came in different military machines," reveals the text of an appeal signed by 300 Gimry
residents, who say they were given no prior warning about the operation. "Shooting was opened. Residents began hurriedly leaving Gimry. From a fright, some
elderly villagers had heart attacks, and one had a stroke. [The agents] turned everything upside down, broke doors and smashed household equipment."

Continuing with changes in the region, in early June the mayor of Dagestan's capital city Makhachkala, Said Amirov, was arrested along with a dozen
companions by an elite Kremlin-affiliated commando squad and taken
by helicopter to Moscow on charges of criminal activity. Amirov was mayor since 1998 and, like Magomedov, enjoyed strong support from the Dargan ethnic
group. He was regarded as the last strong authority figure in Dagestan. The timing of the leadership upheavals was not a coincidence.

"[The timing] was done deliberately," Emil Souleimanov, a writer and professor at the Department of Russian and East European Studies in Prague's Charles
University, told me. "The recent events in Dagestan are closely [linked] to the Kremlin's efforts for the security of the Sochi Olympics. Moscow is
carrying out a number of significant 'clean-ups' of the republic's elites."

In the space of several months, three of the most prominent Dagestanis, Bilalov, Magomedov, and Amirov were swiftly banished from power. But while the
Kremlin ostracism of locals in favor of loyalists may give the impression of taking control over an unruly region, such tactics will likely be ineffectual
in curtailing the radical ideologies that are the true threat to stability.

***

The Caucasus Emirate, the largest and most active militant group in the North Caucasus, was responsible for the bombings of Moscow's Metro in 2010 and its
airport in 2011, killing 76 people and injuring hundreds more civilians. In 2007 the group's leader, Doku Umarov, labelled Russia and other Western nations
as the enemies of all Muslims. Such statements by Umarov have been oft-quoted in the media, elevating the perception of a militant threat at the Sochi
Olympics.

However, more recently the Caucasus Emirate has moderated its stance, and it has little to do with pressure from the Kremlin's strong-arm tactics. Last
year, following the surge in Russia's anti-Putin protests, Umarov released a video in which he stated: "Events in Russia have shown us that Russia's
peaceful population does not support Putin's Chekist [security state] regime." He added that militant operations should be carried out "with precision
against the security services, the special services, and the reprobates who are officials ... Our religion tells us to take care of the peaceful population
and not to touch them." Then in April this year, the Caucasus Emirate made a statement distancing itself from Tamerlan Tsarnaev and the Boston bombings,
noting the "order by the Emir Doku Umarov, which prohibits strikes on civilian targets".

The ability of civilians in Moscow and St Petersburg to openly demonstrate their discontent prompted the militant network to change the tone of its
campaign. But diminishing the autonomy of the North Caucasus may undo any progress toward the group's moderation.

Regardless of whether the Caucasus Emirate reverses it outlook or if offshoot groups attempt attacks, tight security at Sochi will dampen the potential for
violence at the Olympics. The event will likely pass off peacefully and be deemed a success, but it will be a temporary mask over the wide-ranging
suppression and disenchantment in the North Caucasus.

The Kremlin's latest efforts at spreading its wings and establishing centralized rule in the vast, multi-ethnic region will likely prove to be an obstacle
to long-term stability. Short-term aesthetics cannot reconstruct a fractured region.